Rising interest rates, high inflation, and soaring home prices have many people concerned that the U.S. is headed toward a recession. A recent poll of 49 economists by The Financial Times and the University of Chicago Booth School of Business found that 70% concurred that a recession is imminent in 2023.
Similar to the Great Recession, a looming recession will likely affect how individuals make financial choices and perceive the labor market. A recession could have many ramifications on the working class, including pushing back homeownership, forcing workers to suffer through unsatisfactory working conditions, and even diluting recent strides achieved in the modern labor movement.
If the 2008 recession is an indicator, working class Americans have the most to lose from a recession—so why is the Federal Reserve giving them the blame?
The Fed wants lower wages
Federal Reserve Chairman Jerome H. Powell said at press conference in May that in order to stabilize the economy and bring record-high rates of inflation downward, the U.S. needs “to get wages down.”
“Employers are having difficulties filling job openings, and wages are rising at the fastest pace in many years,” Powell said.
Not everyone sees it this way, though. According to Ted Pappageorge, the secretary treasurer of Culinary Union 226, one of the U.S.’s largest and most rapidly growing labor unions, other more sinister forces are currently at play.
“What’s really going on right now is massive price gouging by these incredibly wealthy corporations that have done extremely well, like some oil companies have had record high profit [this year],” Pappageorge said.
A tale of two workforces
Concerns about the labor shortage lack some context around which industries are actually being affected. According to the U.S. Chamber of Commerce, hospitality, food service, education, health, and wholesale and retail trade sectors are industries with current labor shortages. It isn’t a coincidence that shortages are being experienced most profoundly in high-risk and frontline jobs where employees are reckoning with workplace inequality.
“There’s a real split in how the American workforce is constituted at this point. On the one hand, about 43% of the American workforce is professional folks, white-collar workers, and managerial workers, the vast majority of whom were able to teleconference during quarantine, and as a general rule of thumb are better compensated,” said Shaun Scott, who currently serves as the policy and field campaign manager for the Statewide Poverty Action Network and previously worked for Rep. Pramila Jayapal’s campaign staff in 2018, which was the first unionized staff for a sitting congressperson in the U.S. Scott’s subsequent bid for the Seattle City Council had the first unionized campaign staff in the history of the city’s elections.
“Then you have another part of the workforce, service workers, people who are teachers, rideshare drivers, and grocery workers. That part of the workforce does not have, by and large, the benefit of telecommuting, and that contingent of the workforce tends to be more non-male and more brown and pigmented than the managerial tier of the American workforce,” Scott said. “So when you have a two-tiered kind of workforce in that respect, you have an inherent inequity, and I think what we’ve been seeing with the wave of unionization is the cohort of laborers that work in the service industry saying, we’re not gonna take it anymore.”
Waves of unionization
The past fiscal year has seen an increase in both union participation and favorability in the eyes of the American public. The National Labor Relations Board reported that union representation petitions increased by 57% for the first half of the fiscal year 2022, compared to the same period last year. An annual favorability poll on unions by Gallup showed that in 2009 only 48% of Americans approved of unions, compared to 68% in 2021. Private sector worker unionization has declined steadily in the U.S., going from 17% in 1983 to 6% in 2021. This is why recent unionization efforts and successes at REI stores, Starbucks, and Amazon locations across the U.S. have been met with such high levels of vigor from the labor movement.
These labor movement strides happened in conjunction with what economists and labor market experts are calling the Great Resignation, a pandemic-induced trend of American workers quitting their jobs at record high levels in search of higher pay or better working conditions. In April 2022, the total number of employees who voluntarily left their jobs was 4.4 million, with layoffs and discharges accounting for an additional 1.2 million.
Labor during a recession
Similar to the COVID-19 pandemic, an economic recession is likely to bring tough times for families and workers, and union support may be key to staying afloat.
“During the pandemic, it was my union [Culinary Union 226] that fought for things like SB 4, which pushed companies to make sure they have daily cleaning practices and PPE for all employees,” said Carlos Padilla, a 29-year union member and Las Vegas hospitality worker.
Unions can also ensure that employers don’t dock pay during economically turbulent or low-profit periods.
“As far as the recession goes, we have a contract [for our wages]. Our union fights for this kind of stuff,” Padilla said.
From a historical perspective, The Great Depression actually empowered workers due to New Deal-era reforms that followed suit, such as the establishment of a federal minimum wage, the landmark Norris-LaGuardia Act, which forbade employers from contractually preventing employees from joining unions, as well as then-President Franklin D. Roosevelt’s notable pro-labor stance.
However, the Great Recession of the mid-2000s left many feeling disparate due to the deep-running scars of foreclosures, wage stagnation, and sudden job losses. For many families, the Great Recession is still with them.
Following the last recession, public approval of unions reached a historically low point, as did the collective bargaining power of unions and employees, whereas unemployment increased dramatically, peaking at 10% in October 2009. Long-term impacts of the Great Recession indicate that individual earning power, especially for those who would have been considered early career professionals at the time, has been permanently diminished. Student loan debt also significantly increased, as the economic crisis pushed individuals out of the job market and toward higher education and left many people with fewer resources to not only pay for college, but also make payments on outstanding debt.
However, folks like Pappageorge and workers who are members of unions remain hopeful that the upcoming recession will not gravely cost the labor movement and working class individuals as it did with the Great Recession. The most important thing for newly unionized workers to do, he said, is to remember to work together and advocate for themselves.
“We’ve got opportunities here, and it’s up to us to take advantage of that,” Pappageorge said.
“It’s a wonderfully romantic idea that workers can just do stuff on their own, but against these large companies and giant corporations, it’s a rigged game. We have to act like brothers and sisters, and that’s what unions are all about,” Pappageorge said.